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On July 6, the Sino-US trade war began and the tariff improvement policies announced by both parties were in effect. But the first day of the "war" is also a lot of stories.
The poor American soybean ship did not reach 12 points: early in the Beijing period, the US Commerce Bureau suddenly issued a notice saying that US companies that were importing Chinese products affected by 90 days trade war to ask the US government for a "tariff exemption" of one year If a product is exempted, the US company that imports the product will not be subject to additional tariffs.
Just started to open a "back door" to American companies, which shows that the trade war has already scared American businesses and that the White House does not want to offend a group of entrepreneurs because of commercial wars. How about after 3 months? In mid-term elections in the United States, during this sprint, Trump was reluctant to win the votes of ordinary voters, but lost the support of the business community. Although it is not yet possible to conclude that Trump has begun to "shake", this paper notice clearly shows Trump's painful points.
In fact, for this Sino-US trade war, the US national opposition is not small.
Today, Knight Island has recommended the latest speech by Federal Reserve Chairman Alan Greenspan that on July 7, at the 4th China Fortune Forum, Greenspan expressed its concerns about the commercial war. He believes that "US tariffs imposed by the United States are actually paid by US nationals. The United States should stop imposing high tariffs.If it does not cut, all US tax cuts and the benefits reductions, including the various economies and investments, will be offset by tariff policies. "
The original speech was very long, and the island was published.
Greenspan: Why I am opposed to Trump's commercial war
Greenspan
The so-called trade war, just started between China and the United States, I will not repeat the cause, everyone is very clear.
But I want to talk about some of the changes that come out of it, and what is its essence?
First of all, the reaction of the steel and aluminum industries is actually a potential political problem. We have found that steel and aluminum are a very important area for the US President and that they must be better in this area. Why?
Voters who voted for the US president were mainly in the US rust zone, that is, in the central part of the United States, followed by the eastern part of the country . These voters should be given special attention and the trends in the steel and aluminum industries are closely related.
For example, for steel, the United States accounted for 23% of world steel output from 1976 to 5% in 2015. On the other hand China's steel rose from 3% to 50%.
We observe similar trends in the aluminum industry. For the United States, aluminum production once accounted for 40% of world production. But in 2016, it fell to 3%. On the contrary, the share of Chinese production rose from 1.5% in 1960 to more than 40% in 2016. Such changes have a very important political impact.
For the American president, he must make some reactions and slowly evolve towards a trade war between the two major economies. There is now a proliferation, and we know that its influence is spreading gradually, but we Is not clear what kind of trend will occur in the future.
However, before addressing this issue, I would like to introduce you to the economic outlook of the United States.
Greenspan: Why I am opposed to the Trump Trade War,
I want to show you the status quo of the United States. Changes in GDP between China and the United States can actually reflect people's standard of living. China's share of GDP per capita in global growth is also increasing, while the United States is declining. This had a profound impact on the American political system. Why is this happening?
First of all, China can grow at such a remarkable speed, which means that China's output is that the effect of China's capital investment is very important, which is the fundamental engine of any economic growth.
We can compare the savings rates of the two countries. In the United States, our savings account for about 20% of GDP, while China's share is significantly higher, especially in recent years. It also tells us that the more capital you get, the more you invest and the more economic growth. But basic economies and significant growth in investment are a big headache for the United States – why do Chinese people like to save so much?
But where does US GDP growth come from? For the US economy, where is the road?
We can examine the proportion of welfare spending and total saving in the United States, and the gap between the two decreases. As our well-being increases, our total savings are affected and it reduces the savings space in the GDP. Because the American law determines the expense of well-being, well-being is not compressed. Yes, the United States is now a space where the benefits are weighing on savings.
Obviously, it's a very unusual phenomenon. Under current legislation, according to the future that I have seen, social welfare will continue to increase in GDP spending, which means that total national GDP savings will continue to decrease. National savings can provide financing for investment, China has a very big advantage in this regard: while the US savings is falling, the United States has less of a 'good'. advantages.
Before 1980, the impact of US savings on investment was significant. But since 1980, saving has not been the only factor that boosts domestic investment, or I must say that this is no longer the only factor that one can see in history. After 1983 or 1986, we found that for capital investment, there was another important engine, borrowing. We started borrowing more to finance capital investments, which boosted GDP growth.
The loss of the US capital account was relatively moderate until 1990, but after that we saw that the amount of US total borrowing reached 8 trillion US dollars. But we can see recently in the quarterly data that these creditor countries in US dollars no longer want to finance the United States as they have done in the past.
Why did these changes take place? Capital stocks are the basis of productivity growth. However, productivity growth has already experienced a significant slowdown, including in many Western countries, where the rate of personal productivity growth has not exceeded 1% in the last five years. In other words, it is a stagnant growth in productivity. That is why many Western countries, including Europe and the United States, have experienced very significant populism.
Now, populism is sweeping the continental United States, and it is also crossing the countries of Western Europe, and it continues to spread. Populism is not a novelty, it is a current of philosophical thought, but unlike communism, socialism or capitalism, populism is not fixed, or it is not not a very stable trend in philosophy. Populism is actually a need for help, a call for help. In the United States, in Western Europe and in other countries, it actually reflects the dark future of the local population. Any politician can stand up and respond to this trend and get more votes. We have seen many of these phenomena in recent years, mainly in South America and North America, and now Europe is facing such challenges.
This is not actually a rational badysis that can help us understand, and it is difficult for us to grasp the heart of the problem. I think the best way is to admit that it is a very unusual phenomenon. It's a fundamental change at this time.
Then I want to talk briefly about the tariffs and the frightening problems that tariffs impose on us.
Some US government officials believe that tariffs are a way for them to hinder China's development, but this is not the case. When you apply rates, it's actually a short-term tax burden. We now find that tariffs do not apply only to some more modest products, such as steel and aluminum, but now extend to almost all products.
An important point here is that some people say that not only the US government, but other governments also have the idea that when you raise taxes, you want to create problems for the exporting country goods, but in fact, this tariff is yours to pay for your own nationals. In my opinion, when you raise the rates, you affect the purchasing power of countries that impose tariffs, in other words, if someone says they want to impose a tariff of $ 1 billion. dollars, that's equivalent to yourself. Nationals receive billions of dollars and billions of dollars in taxes. We think that it is politically unacceptable, and it is not very easy to implement.
It's like a very heavy tax burden. We can see from the experience of history that you can collect taxes on the economy, and tax increases will lead to economic recession. We are now close to that.
So, I think we should stop continuing to impose high tariffs. A tariff policy such as the United States will affect not only the United States but also Europe, Asia and especially China, which could have positive effects and some improvement in the statistical deficit, but Is the problem. If rates are not reduced, all the prior development benefits of the United States, such as corporate tax cuts and regulatory reduction, including savings and l & # 39; investment, will be offset by pricing policies. Rates can become very high, but they can also lead to stagnant economic growth, which is a big problem now.
The Sino-US trade war is the biggest trade war we have ever known, and I do not think there is any way to guess from the other trade wars that have been experienced up to where is the impact of this war. This kind of war will cause an economic slowdown, and everyone in the West could fall into such an economic problem. I think that before we can really start this war, we have to stop the waste of time, otherwise we will encounter more serious problems. I can only say "hope in the future".
from
Source: Xia Kedao
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